Safeway 2012 Annual Report Download - page 94

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SAFEWAY INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
82
guarantor must disclose and recognize a liability for the fair value of the obligation it assumes under the
guarantee. As of December 29, 2012, Safeway did not have any material guarantees.
However, the Company is party to a variety of contractual agreements under which Safeway may be obligated
to indemnify the other party for certain matters. These contracts primarily relate to Safeway’s commercial
contracts, operating leases and other real estate contracts, trademarks, intellectual property, financial
agreements and various other agreements. Under these agreements, the Company may provide certain
routine indemnifications relating to representations and warranties (for example, ownership of assets,
environmental or tax indemnifications) or personal injury matters. The terms of these indemnifications range
in duration and may not be explicitly defined. Historically, Safeway has not made significant payments for
these indemnifications. The Company believes that if it were to incur a loss in any of these matters, the loss
would not have a material effect on the Company’s financial condition or results of operations.
Note Q: Discontinued Operations
In January 2012, Safeway announced the planned sale or closure of its Genuardi’s stores, located in the
Eastern United States. These transactions were completed during 2012 with cash proceeds of $107.0 million
and a pre-tax gain of $52.4 million ($31.9 million after tax). The historical operating results of these stores
have not been reflected in discontinued operations because the historical financial operating results were
not material to the Company’s consolidated financial statements for all periods presented.